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FHLMC Guide Bulletin 2013-21 Updates Mortgage Servicing Requirements

On October 11, Freddie Mac released Guide Bulletin 2013-21, subtitled Updates in Response to the CFPB Mortgage Servicing Final Rule.

UPDATES IN RESPONSE TO THE CFPB MORTGAGE SERVICING FINAL RULE

Freddie Mac is providing Servicers with updated mortgage servicing requirements in today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2013-21. The updated requirements are in response to the Consumer Financial Protection Bureau’s (CFPB) final rule, which implements the mortgage servicing provisions of the Truth-in-Lending Act and Real Estate Settlement Procedures Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

All of the changes announced in this Guide Bulletin are effective for Servicing activities completed on or after January 10, 2014.

The revised requirements announced in today’s Guide Bulletin, which impact requirements adopted under the Federal Housing Finance Agency (FHFA)-directed Servicing Alignment Initiative, are the result of discussions between Freddie Mac, Fannie Mae, and FHFA to assess the implications of the final rule. FHFA has directed us to align with Fannie Mae on the revised requirements included in this Guide Bulletin.

Servicers Are Responsible for CFPB Final Rule Compliance

While Freddie Mac has established our servicing requirements in response to the CFPB’s final rule, Freddie Mac will not interpret CFPB regulations for Servicers or determine how Servicers should comply. Compliance with the CFPB final rule and other applicable laws are the Servicer’s responsibility. A Servicer’s compliance with Freddie Mac’s requirements does not ensure that the Servicer is in compliance with the CFPB final rule or any other applicable laws.

Servicing Requirements for Delinquent Mortgages Secured by Primary Residences

We’ve added new Guide Chapter 63, Delinquency Management on Mortgages Secured by Primary Residences, to provide guidance on communication and collection efforts, the appeals process, and foreclosure referrals and suspension. Please familiarize yourself with the following changes:

  • Collection Efforts and Use of a Loss Mitigation Tool. Servicers are prohibited from using a loss mitigation tool for purposes of delaying the initial borrower solicitation package required to be sent by the 35th day of delinquency. Servicers are now required to send the initial borrower solicitation package as early as the 31st day and no later than the 35th day of delinquency unless quality right party contact and borrower commitment to cure the delinquency has been obtained. Servicers may continue to use a loss mitigation tool to manage calling campaigns.
  • The Appeals Process. New requirements are being introduced for the borrower’s appeals process for the First Complete Borrower Response Packages (BRP) submitted 90 or more days prior to a foreclosure sale date or when a foreclosure sale date has not yet been scheduled. Refer to Guide Section 63.3 for these new requirements, the Guide Glossary for the newly defined “First Complete Borrower Response Package”, and Guide Exhibit 93, Evaluation Model Clauses, for updated evaluation model clauses.
  • Revised Foreclosure Referral Requirements. Servicers may no longer refer to foreclosure any earlier than the 121st day of delinquency unless one of the exceptions outlined in Guide Section 66.9.1 applies or applicable law permits earlier referral. Servicers must refer all mortgages secured by Primary Residences with expired breach letters to foreclosure no earlier than the 121st day of delinquency and no later than five business days after the 121st day of delinquency. In addition, Servicers must take the first legal action after referral to foreclosure.
  • Foreclosure Suspension Obligations. After referral to foreclosure, if a Servicer receives the First Complete BRP on a mortgage secured by a Primary Residence more than 37 days prior to a foreclosure sale date or a foreclosure date being scheduled, the Servicer must delay taking the first legal action. If the first legal action has been taken, Servicers must delay motion for judgment or order of sale unless certain conditions apply.

Servicing Requirements for All Mortgages

Today’s Guide Bulletin also announces updates for servicing requirements related to BRP acknowledgement, error resolution, disaster forbearance plans, and pre-referral to foreclosure.

  • BRP Acknowledgement. Within five business days of BRP receipt, Servicers must confirm in writing to borrowers that they’ve received the BRP.
  • Error Resolution. Freddie Mac has replaced our current case escalation requirements with provisions for error resolution for any servicing errors asserted by borrowers.
  • Disaster Forbearance Plan. A complete BRP must be obtained when the borrower is being considered for and offered a forbearance plan exceeding six months in length. In cases where borrowers impacted by an Eligible Disaster are unable to provide complete BRPs at the end of an initial six months of disaster forbearance, Servicers may offer a successive disaster forbearance plan up to an additional six months in length without a complete BRP. Servicers may not exceed a total of 12 months of disaster forbearance in total without Freddie Mac approval.
  • Pre-Referral to Foreclosure. Servicers now have up to 15 days to complete their pre-referral review prior to foreclosure referral. We’ve also eliminated the requirement for Servicers to postpone foreclosure referral for up to 10 days if a complete BRP is received.

Today’s Guide Bulletin has detailed information about these changes.

Reminder about CFPB and ECOA Final Rule

Finally, we’d like to remind Servicers to review Freddie Mac updated guidance related to the CFPB final rule that implements the Equal Credit Opportunity Act property valuation notice and disclosure requirements in our October 8 Guide Bulletin 2013-20.

Training and Resources

To help Servicers understand the new and revised requirements announced in this Guide Bulletin, we encourage registration for the Bulletins 2013-20 & 2013-21:  Servicing Updates in Response to the CFPB’s Mortgage Servicing Rules webinar.

Visit Freddie Mac’s Learning Center to view updated training materials supporting the changes announced in this Bulletin.

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About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders,  and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.

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CEO

Alan Jaffa

Alan Jaffa is the Chief Executive Officer for Safeguard Properties, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to Chief Operating Officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur Of The Year® Award finalist in 2013.

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Esq., General Counsel and EVP

Linda Erkkila

Linda Erkkila is the General Counsel and Executive Vice President for Safeguard Properties, with oversight of legal, human resources, training, and compliance. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, risk mitigation, strategic planning, human resources and training initiatives, compliance, insurance, litigation and claims management, and counsel related to mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. She has practiced law for 25 years and her experience, both as outside and in-house counsel, covers a wide range of corporate matters, including regulatory disclosure, corporate governance compliance, risk assessment, compensation and benefits, litigation management, and mergers and acquisitions.

Linda earned her JD at Cleveland-Marshall College of Law. She holds a degree in economics from Miami University and an MBA. Linda was previously named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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COO

Michael Greenbaum

Michael Greenbaum is the Chief Operating Officer of Safeguard Properties, where he has played a pivotal role since joining the company in July 2010. Initially brought on as Vice President of REO, Mike’s exceptional leadership and strategic vision quickly propelled him to Vice President of Operations in 2013, and ultimately to COO in 2015. Over his 14-year tenure at Safeguard, Mike has been instrumental in driving change and fostering innovation within the Property Preservation sector, consistently delivering excellence and becoming a trusted partner to clients and investors.

A distinguished graduate of the United States Military Academy at West Point, Mike earned a degree in Quantitative Economics. Following his graduation, he served in the U.S. Army’s Ordnance Branch, where he specialized in supply chain management. Before his tenure at Safeguard, Mike honed his expertise by managing global supply chains for 13 years, leveraging his military and civilian experience to lead with precision and efficacy.

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CFO

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard Properties. Joe is responsible for the Control, Quality Assurance, Business Development, Marketing, Accounting, and Information Security departments. At the core of his responsibilities is the drive to ensure that Safeguard’s focus remains rooted in Customer Service = Resolution. Through his executive leadership role, he actively supports SGPNOW.com, an on-demand service geared towards real estate and property management professionals as well as individual home owners in need of inspection and property preservation services. Joe is also an integral force behind Compliance Connections, a branch of Safeguard Properties that allows code enforcement professionals to report violations at properties that can then be addressed by the Safeguard vendor network. Compliance Connections also researches and shares vacant property ordinance information with Safeguard clients.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.

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Business Development

Carrie Tackett

Business Development Safeguard Properties